The decision was widely expected by economists, with Europe still recovering from recession.

But it follows positive data on the eurozone, with industrial production found to be growing twice as quickly as expected.

Interest rates have been at 1% since May last year.

Greece fears

Economists argue that rates are unlikely to increase while eurozone inflation remains well below the ECB’s target of 2%.

There are also questions over the state of Europe’s economic recovery, with the state of Greece’s public fianances a particular concern.

Last year, Greece admitted that its budget deficit was expected to reach 12.5% of GDP, attracting the condemnation of the European Union.

The eurozone prohibits budget deficits of more than 3% of GDP.

Real estate prices rose by 7.8% from a year ago – up from the 5.7% annual rise seen in November and renewing fears that an asset bubble is developing.

Chinese authorities have expressed concerns that property prices are rising too fast.

On Tuesday, China’s central bank announced measures to curb lending in order to reduce real estate investment.

Lending boom

Last year, Chinese banks issued $1.5 trillion (£932bn) in loans in order to boost economic growth – with a large proportion being used to invest in property.

One of the leading rating agencies, Fitch Ratings, has been among those expressing concern over the trend, arguing that too much lending could harm the banking sector as well as the property sector.

“Fitch is concerned about an eventual deterioration in banks’ asset quality, amid the loan growth acceleration in 2009,” the ratings agency said.

“High investment spending, particularly in the real-estate sector, also carries the risk of asset price misalignments.”

Banks have been told to increase the amount of capital they hold in order to curb lending, and Chinese city authorities have been told to speed up property developments and build more low-cost housing.

The government also this month brought back a sales tax on property sold within five years of its purchase to discourage speculators looking to make quick profits.

Many in the crowd said they were so awestruck by the sheer audacity of what Dubai had accomplished with the building, the Burj Khalifa, that they were convinced that this brassy sliver of outsized ambition in the Persian Gulf would continue to command envy and investment despite Dubai’s spectacular and humbling financial stumble.

“This shows how the wealth is moving from the West to the East,” said Prajash Kelkar, who has lived in Dubai for 11 years and said he has no worries about the financial situation. “It’s the pride of Dubai.”

There is no question that Dubai’s leaders are practiced in the alchemy of image. With all their recent troubles, they focused on completing this one “iconic” project, as they like to call it. But with an estimated $100 billion in debt, a burst real estate bubble, disillusioned investors, a skyline defined not by one tall building but by a host of unfinished buildings, is that enough?

The answer many be found nearby in International City, one of Dubai’s less heralded but no less brazen projects. It stands now as an example of what happens when a housing market collapses, rents drop and those responsible for maintenance and services are short on cash and deep in debt.

The 2,000-acre development, which aspired to “become the business and cultural hub of the Middle East,” according to its Web site, has fallen far short of that. Traffic circles are now overgrown. Apartment buildings are almost completely vacant. Rows of storefronts are empty.

Families say they feel stuck, unable to sell and frightened for their safety. There are reports of crime, and what was supposed to be a family neighborhood has been transformed into a place where companies house low-wage laborers.

There are piles of construction debris, a flooded parking lot and street lights that do not work. A nearby sewage treatment plant emits waves of foul fumes. While no one has predicted that Dubai will become one vast International City, financial analysts said that International City’s problems did seem to represent the direction of things to come.

Mammoth developments, like the Dubai Mall, with its shark-filled aquarium, ice skating rink, decorative fountain, a 22-screen movie theater and miles and miles of stores, need lots of people spending lots of money to finance the developments’ debts. But those people, so plentiful in years past, are disappearing.

In International City, “Lots of people have already left,” said Raj Kuwar, owner of Sky Market Grocery. Mr. Kuwar said that his business was down 30 percent from last year but that another kind of business, prostitution, appeared to be up.

“Those girls have moved to this area now, because the rents are cheaper,” he said.

The complex of apartment buildings was developed by Nakheel, the troubled arm of the government-owned conglomerate called Dubai World. It was Nakheel that built the Palm Jumeirah, an island shaped like a palm tree and packed tight with apartment buildings and villas. It was also Nakheel’s decision to stop paying interest on its $26 billion debt that first revealed the depth of Dubai’s financial problems.

Today, whole blocks of buildings at the Palm are dark, and appear empty.

But the Palm, at least for now, manages to retain an image of privilege and status. Not so International City.

Bassam Saade lives in one of the buildings there with his wife, Charlie, and their son, Fawzi. On his son’s first birthday this month, he decorated his front door with balloons, though there was virtually no one to share the celebration with. He said that of 44 apartments in his building, only 6 remained occupied.

Mr. Saade said that the building’s janitor no longer used cleaning fluid, only water, that the lock on the entrance door had been broken for a long time and that there was very little other maintenance. He said he would not open the windows because of the stench from the sewage plant.

The one good point, he said, was that he no longer had trouble finding parking.

If there is hope for Dubai, financial analysts said, it is in Abu Dhabi, the emirate that serves as the capital of the United Arab Emirates and sits on a large pool of oil. The emir of Abu Dhabi, Sheik Khalifa bin Zayed al-Nahyan, has already come to the rescue with $10 billion to pay immediate debts and forestall a financial collapse. But that may just forestall the inevitable. “The image of course will probably fade; it will not be as it used to be,” said Amer al-Tameemi, an economic analyst from Kuwait.

But perhaps not. Dubai’s leaders learned long ago the value of image, of how large shiny objects inspire confidence. And it seemed to be working again, here in the shadow of the Burj Khalifa.

There seemed a collective case of tunnel vision. No one saw — or at least spoke of — the stilled cranes bordering the tower. “I have not lost even 1 percent of my confidence in Dubai,” said Mohana Kelkar after her husband, Prajash, took her picture.

Ahmed Khalifa and his friend, Sultan Obeidy, joined the crowds, too. They both said that the building was great, but that even more important was the scene around them, where people from all over the world gathered in one place, free to celebrate together.

“Dubai’s success comes from risk-taking,” Mr. Khalifa said. “That won’t change.”

And while that could initially bolster the prospects of Baidu (pronounced by-DOO), a home-grown company that is already dominant here, analysts say Google’s departure could also slow the overall development of the Internet in China.

“The whole industry will become worse,” said Yu Yang, chief executive of Analysys International, a Beijing research firm. “Without competition with Google, Baidu has no motivation to innovate.”

Analysts say that Baidu established a leading position in the Chinese market through a combination of factors, including a keen understanding of local tastes and its willingness to cooperate with government censorship efforts.

Today Baidu has about 300 million visitors, a market value of more than $15 billion, and 63 percent of Internet search revenue in China, nearly double the 33 percent share of Google, according to iResearch, a Chinese consulting firm.

“It’s a duopoly in China,” said Richard Ji, an analyst at Morgan Stanley. “There’s just Baidu and Google. And Baidu’s way ahead.”

The prospect that Baidu could become a de facto monopoly in China’s search market sent its American depositary receipts soaring 13.7 percent on Wednesday. They closed at $439.48.

Some analysts said that Google’s inability to catch Baidu was one reason the American company might have decided it was willing to give up on the China market.

Baidu was co-founded in 1999 by Robin Li, a graduate of one of China’s top schools, Peking University. He later studied computer science at the State University of New York at Buffalo, and then began experimenting with search engine technology. Mr. Li worked at Infoseek, one of Silicon Valley’s earliest search engine companies, before returning to China to co-found Baidu with a young biochemist.

The company was listed on the Nasdaq in August 2005 at $27 a share.

Mr. Li, 41, is now worth an estimated $3 billion, according to Forbes.

Larry Rafsky, who worked with Mr. Li at a New Jersey software company in the 1990s, called him an Internet pioneer. He invented a “page-ranking algorithm virtually identical to what we know about Google’s first attempts,” Mr. Rafsky said in an e-mail interview a few years ago.

Google, meanwhile, dipped its toes in the Chinese market back in 2000, when it developed a Chinese-language interface for its main Google.com site. In 2004, it acquired a small stake in Baidu, which was then a tiny start-up.

In 2006, Google entered the market more directly by starting Google.cn, a search engine specifically built for Chinese users. At that time, Google agreed to censor Google.cn to screen out content that the Chinese government found objectionable, drawing criticism from some human-rights groups. The company sold its $60 million stake in Baidu shortly thereafter.

Despite its leading position in much of the world, Google has had difficulty gaining ground on Baidu.

Google executives insisted they had better technology; Baidu countered that it had local expertise.

In China, Internet users are mostly young and searching for music and entertainment rather than information. Baidu created a shopping mall of Web offerings, many of them imitations of popular Web sites like MySpace.

Baidu also dominates music downloads, often with links to Web sites that music companies say offer illegal downloads. Baidu has defended the practice, saying it simply provides the links.

Baidu’s strong relationship with the government contributed to its rise. “If the government wants something removed, it will do it immediately,” said Hong Bo, a consultant with 5G, a Beijing consultancy. “On the other hand, everything with Google has to go through its headquarters.”

Baidu faced criticism after the local media published reports saying Baidu gave high search rankings to companies selling illegal drugs. Soon after, Baidu signed a multimillion-dollar sponsorship deal with China Central Television, which had broadcast an investigative piece on Baidu. A spokesman for Baidu declined comment on the incident.

Google made some inroads against Baidu last year under Lee Kai-fu, a former Microsoft executive who took over Google’s China operations in 2006. But Mr. Lee announced his departure from Google last September, saying he was forming a company that would help Chinese start-ups.

Google has also tangled with the government over videos on its YouTube site and links to content that censors said was obscene.

Late last year, some Chinese book authors attacked the company, saying it had scanned their books without permission. Google apologized Monday and said it would work to strike a formal agreement on the scanning.

Now, after building a company with 700 employees and about 200 engineers in Beijing, Google says it is considering pulling out of China altogether.

If Google follows through on its threat, analysts say that Yahoo China, whose market share has plummeted since being sold to a local company called Alibaba, could gain market share. Microsoft, the No. 5 player by share of searches according to comScore, could also seek to fill the void.

But if other search companies do not step in, Chinese users could be seriously hurt, some Internet experts said.

“If Google really pulls out of China, for millions of citizens, they lose an excellent search engine and its relevant Internet services, like the Android mobile phone,” said Fang Xingdong, chief executive of Chinalabs.com, and the so-called father of the Chinese blog.

“Chinese netizens are the biggest loser in this accident.”